“It’s quite clear that with 60% of the EU’s financial services industry located in the UK, the bankers and fund managers are seen as more than just big business. The British government regards their prosperity as a matter of national security, their interests to be weighed against other geopolitical considerations such as our membership of the EU and the principle that the violation of the borders of sovereign states demands punishment.

Not that Britain is alone in this. Germany is reluctant to come down hard on Russia, its No 1 trading partner, on whom it relies for its domestic energy. France enjoys a lucrative relationship with Moscow, too, and is contracted to build two valuable Mistral-class warships for the Russian navy. They’re looking out for their “strategic” industries, just like Osborne.

The result is that Vladimir Putin knows he can scarcely be touched. That would be true of any state that is a nuclear-armed, permanent member of the UN Security Council. But it’s truer still of a state whose money and resources the west needs. It makes Russia doubly untouchable.

The lesson for any regime watching the Ukraine crisis unfold is clear. Sending troops into the territory of a sovereign state is completely unacceptable and you will be pushed back – unless, that is, you are strong and hurting you hurts us. Then different rules apply.”

Deputy prime minister Nick Clegg said no economic and diplomatic action against Russia should be ruled out. Photograph: Tim Rooke/Rex

Nick Clegg has distanced himself from an official government document stating any European Union action to punish Russia for its invasion of Crimea should exempt the City of London.

The deputy prime minister, who attended a meeting of the National Security Council (NSC) on Monday where officials outlined the thinking in the document, said no economic and diplomatic action against Russia should be ruled out. But he said a military response was “not on the cards”.

Clegg spoke out after a secret government document, drawn up for the NSC meeting on the Ukraine crisis, said that “London’s financial centre” should not be closed to Russians. The document, photographed in the hands of an official arriving for the meeting, did say that visa restrictions and travel bans could be imposed on Russian officials.

The secret document carried by an official The secret document carried by an official in Downing Street. Photograph: Steve Back

Clegg, who was speaking at the Royal United Services Institute (RUSI), said: “Whilst military action – British military participation – is clearly not on the cards, I want to be really clear that Russia will face a range of diplomatic and political and economic consequences if it carries on on its current course.

“We are absolutely not ruling out now the kind of options that we will look at in order to make it very, very clear to President Putin and the Russian Federation that there will be very real consequences. So there is no predetermined limit on the kinds of measures we will look at, envisage, entertain in order to safeguard the territorial integrity of Ukraine.”

Douglas Alexander, the shadow foreign secretary, described the document as a serious blunder. “We have seen reports overnight of what was a serious blunder at a serious time by the government revealing what seemed to be a discord between what was being recommended to ministers in private and what was being said in public.

“I hope today, when the foreign secretary speaks to members of parliament in the House of Commons, he will be clear that Britain along with its allies in the international community have not yet taken economic and diplomatic measures off the table.”

The document, which was photographed by the freelance photographer Steve Back, said Britain should:

• Push the “UN secretary general Ban [Ki-moon] to take the lead in calling and creating a forum for engaging Russia on Ukraine”.

• Accept an emergency summit of EU leaders to discuss Ukraine.

This summit will now be held in Brussels on Thursday.

Government officials said no decisions were made at the NSC meeting, but they confirmed that the call in the document for London’s financial centre to remain open to Russians reflected the government’s thinking that it wanted to target action against Moscow and not damage British interests.

The prime minister told the NSC the government may be prepared to support EU sanctions that targeted Russian businesspeople seeking to visit the EU. There could also be a “dialling down” of economic co-operation.

Downing Street made clear that diplomatic and economic action would need to be taken to punish Russia. But it did not want to give Moscow an excuse to refuse to talk to Ukraine and the EU.The prime minister said after the NSC meeting: “What we want to see is a de-escalation rather than a continuation down the path that the Russian government has taken, violating the sovereignty and territorial integrity of another country.”

He agreed in separate phone calls with his French and German counterparts, François Hollande and Angela Merkel, on Monday night that the international community should speak with one voice on Ukraine as it tells Russia that its actions are “completely unacceptable”.

Cabinet papers photographed outside No 10 revealed the government would not insist on trade sanctions against Russia over Ukraine. Photograph: Steve Back/Rex

So yet another UK government official didn’t get the memo – the one that says when you’re going to a high-level, top secret meeting in Downing Street, try not to arrive carrying papers that can be snapped by waiting photographers. As deputy national security adviser Hugh Powell is the latest to discover, in the age of the zoom lens, they can be read easily. (It turns out there’s a freelance photographer who hangs around outside No 10, one Steve Back, who specialises in just such pictures.)

Still, we should be grateful to the unguarded Mr Powell. If he had popped his documents in a folder we would never know that, whatever other action the European Union has in mind on Ukraine, the British government is adamant that the City of London will be exempt. Or as the official text put it, Britain will “not support, for now, trade sanctions … or close London’s financial centre to Russians.” In other words, even if Russia is in the process of invading a sovereign state, Britain will still do nothing that might dent the profits of the money men in the City.

I say we would never know – but we could have taken a guess. For there is a rather consistent pattern here. In January, George Osborne set out one of the key demands Britain will be making of the EU in the lead-up to the planned in-or-out referendum of 2017, one of those existential needs that must be met if Britain is to stay inside. What was it? “Cast-iron legal protections for the City of London.” The chancellor warned that the UK would leave the EU unless the Lisbon Treaty was changed to prevent the imposition of financial services legislation that might rein in the City.

And who can forget the heroic sight of Osborne heading to Brussels exactly a year ago to fight the good fight – hoping to stop our European partners from capping bankers’ bonuses? If there is so much as a hint of a challenge to the City, Osborne is ready to pull on his armour and ward off all enemies. No matter if that means promising business-as-usual to Russia, whether or not it has invaded one of its neighbours, it’s the City that must come first.

It’s quite clear that with 60% of the EU’s financial services industry located in the UK, the bankers and fund managers are seen as more than just big business. The British government regards their prosperity as a matter of national security, their interests to be weighed against other geopolitical considerations such as our membership of the EU and the principle that the violation of the borders of sovereign states demands punishment.

Not that Britain is alone in this. Germany is reluctant to come down hard on Russia, its No 1 trading partner, on whom it relies for its domestic energy. France enjoys a lucrative relationship with Moscow, too, and is contracted to build two valuable Mistral-class warships for the Russian navy. They’re looking out for their “strategic” industries, just like Osborne.

The result is that Vladimir Putin knows he can scarcely be touched. That would be true of any state that is a nuclear-armed, permanent member of the UN Security Council. But it’s truer still of a state whose money and resources the west needs. It makes Russia doubly untouchable.

The lesson for any regime watching the Ukraine crisis unfold is clear. Sending troops into the territory of a sovereign state is completely unacceptable and you will be pushed back – unless, that is, you are strong and hurting you hurts us. Then different rules apply.